This example serves to
- Clarify the concept of a “capped” vs “uncapped” reward pool.
- Visualize how the inclusion of a “capped” reward pool leads to a better distribution of the Retroactive Backer rewards.
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In green you see the current Backers and the total GFI to be distributed. (For simplicity, 200GFI is used in this example)
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In blue, you find my suggestion
- Half of the rewards are added to pool A. When calculating the rewards for pool A, the amount contributed by each backer is “capped” at 1,000$. This pool favors smaller backers. Including Alexey and Peter, even though they contributed more than the “cap”.
- The other half of the rewards are added to pool B. These rewards are distributed to all Backers, proportional to the capital they provided to the Borrower pools.
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In Red, you can see how the distribution would look if all rewards were proportional to the amount supplied to the Borrower pool
Note: Notice that everyone but Anna receives higher rewards by dividing the rewards between a “capped” and “uncapped” reward pool. I believe this method of distribution will benefit smaller backers (<30,000$). Acknowledging the work they’ve put into the protocol, and encouraging further contributions - not only as Backers, but also as participants in the decentralized governance of Goldfinch Protocol.